Social Sustainability in Apparel Supply Chains-The Role of the Sourcing Intermediary in a Developing Country - MDPI
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sustainability
Article
Social Sustainability in Apparel Supply
Chains—The Role of the Sourcing Intermediary
in a Developing Country
Deniz Köksal 1, *, Jochen Strähle 1 and Martin Müller 2
1 School of Textiles & Design, Reutlingen University, Alteburgstraße 150, 72762 Reutlingen, Germany;
jochen.straehle@reutlingen-university.de
2 Institute of Sustainable Corporate Management, Ulm University, Helmholtzstraße 18, 89081 Ulm, Germany;
martin.mueller@uni-ulm.de
* Correspondence: deniz.koeksal@reutlingen-university.de
Received: 23 February 2018; Accepted: 28 March 2018; Published: 31 March 2018
Abstract: After considering significant literature on sustainable supply chain management (SSCM),
it is evident that research has neglected the social dimension and still lacks in highlighting the role of
sourcing intermediaries in supply chains. The apparel supply chain has increased enormously in
length and complexity, driving apparel retailers to employ sourcing intermediaries who manage their
sourcing activities with suppliers from developing countries overseas. Thus, the purpose of this study
is to enrich existing findings on SSCM by exploring the management of social sustainability when
sourcing intermediaries are in between the focal company and the respective developing country
factories. More specifically, this study aims to understand the role of apparel sourcing intermediaries
for the implementation of social management strategies based on the perception of multiple supply
chain actors. Qualitative data was collected through semi-structured interviews conducted in Vietnam
and Europe. Ultimately ten propositions are presented, all explicitly concentrating on the apparel
intermediary’s role as a significant enabler for social sustainability in apparel supply chains. The roles
are social sustainability, supplier developer and coordinator, gatekeeper and safeguard, cultural
broker, and social risk manager. The social sustainability roles assumed by the apparel sourcing
intermediary offer great opportunities to both apparel retailers and developing country factories.
Keywords: SSCM; supply chain management; sourcing intermediary; social sustainability;
apparel/clothing industry; developing country; suppliers
1. Introduction
Today’s apparel consumers expect constant change and new products have to be available
on a frequent basis. These facts lead to increased pressure on apparel retailers to achieve lower
costs and shorter lead times [1]. Therefore the apparel industry has faced a dramatic shift as
western apparel retailers began to source their products increasingly from developing countries
who offered a competitive advantage with lower labor costs [2,3]. In other words, with its global reach
and as competitive pressures increase, the shift to low-cost developing country suppliers [1,4–7] leads
to increasingly complex, globally dispersed and highly dynamic apparel supply chains [2,6,8–16] and
emphasizes the focus on sustainability. This race to the bottom typically results in a contradiction to
the concept of sustainability, defined as the “development that meets the needs of the present without
compromising the ability of future generations to meet their own needs” by the Brundtland Report
of the World Commission on Environment and Development (WCED) [17]. It becomes specifically
clear when considering the definition stated by The European Commission that CSR (Corporate Social
Responsibility) is “the responsibility of enterprises for their impacts on society” [18]. The literature on
Sustainability 2018, 10, 1039; doi:10.3390/su10041039 www.mdpi.com/journal/sustainabilitySustainability 2018, 10, 1039 2 of 35
the social dimension in SSCM (sustainable supply chain management) has developed over the last few
years, but still remains an insufficiently explored field [19]. Indeed, during the TBL (Triple Bottom
Line) debate [20,21], the environmental dimension came to the forefront and gained much attention by
academics [16,22]. This becomes clear by screening significant literature reviews on sustainable supply
chain management. In fact, the environmental dimension appears to be predominantly researched,
including current research trends in sustainable green supply chain management [23], energy efficiency
and environmental sustainability initiatives [24], and circular economies [25]. Although there is rising
concern toward social issues, the ongoing lack has been underlined explicitly by the latest reviews
on social SSCM [26–28]. This shortcoming calls for socially related research, especially in the apparel
industry. The nature of the buyer-driven apparel industry has been described by academics [14,29–32]
and observe that is characterized by downward price pressures, negative buying practices with regard
to costs, speed and flexibility, and supply chain complexity [1,5,10,14,31,33]. It is agreed that these
attributes cause social issues throughout the supply chain [12,14,26,29,33–38]. In fact, many risks have
been detected, contributing to forlorn social situations in the apparel supply chain that lead to poor
working conditions such as sweatshops [39,40], child labor [34,41,42], and even factory collapses like
the Rana Plaza building in Bangladesh [39,40,43–49]. Therefore, apparel retailers are increasingly in
the spotlight and the subject of harsh media criticism and are under growing pressure from external
stakeholders like consumers, governments, and NGOs [12,16,26,38,49]. As a consequence, apparel
retailers implement social management strategies [26,27,49] in order to tackle social issues in their
supply chain and to respond to and mitigate external risks [12,16], especially when the unfavorable
publicity will cause lasting damage to the apparel brand [44,46,48,50].
In general, apparel retailers have two basic options for sourcing products from developing
countries i.e., direct sourcing, mediated sourcing, or a combination of both [51]. In fact, these
circumstances pushed apparel intermediaries into the foreground, facilitating the management of
globally dispersed value chains that generate remarkable competitive advantages for apparel retailers
to achieve the best prices, quality, and lead times possible [15,51–56]. Nonetheless, independent
sourcing intermediaries are another actor in the apparel supply chain [15,52,55] and researchers point
out the increasing difficulties in implementing sustainable supply chain management strategies the
longer a supply chain becomes [14,57]. Consequently, the need to understand how to integrate social
sustainability with globally fragmented supply chains is a critical task [12,26,28]. Specific questions
arise, such as how apparel retailers control and perform social management strategies [26–28,49] once
independent sourcing intermediaries exist in between the factory and the focal company. Moreover,
to the best of the authors’ knowledge, this study is the first of its kind to explore the role of the sourcing
intermediary for the implementation of social sustainability to the apparel supply chain based on
the view from three supply chain actors i.e., the apparel retailer, sourcing intermediary, and factories.
To date no other study was found investigating the apparel supply chain with an exclusive focus on
the intermediary and its role for social sustainability, thus contributing to the SSCM debate with novel,
inductive findings to trigger socially related research in sustainable supply chain management and
open new avenues of research.
Accordingly, this study attempts to extend existing sustainable supply chain frameworks with
new insights and viewpoints while tackling the ongoing lack and widely neglected area regarding
the investigation of apparel intermediaries, social sustainability, and research in developing countries.
Ultimately this leads to the question of why and how are Vietnamese apparel suppliers sourcing
intermediaries and how are the factories tackling social issues? How do apparel supply chain
actors perceive the role of the apparel sourcing intermediary for the implementation of social
management strategies?
By conducting semi-structured interviews with an apparel sourcing intermediary, one of its
customers (a western apparel retailer), and four of its respective suppliers, the authors contribute to
both academic and professional discourse. Thus, the paper at hand learns from industry professionals
and extends existing conceptual models on socially related SSCM with a new actor, the sourcingSustainability 2018, 10, 1039 3 of 35
intermediary. Furthermore, this study offers valuable managerial guidelines by highlighting the
importance of the social dimension in apparel supply chains and gives valuable advice on the effective
management of the CSR practices of an apparel company.
The second section provides a brief summary of recent SSCM related literature reviews, including
the presentation of a theoretical framework and the characteristics of the apparel industry to justify the
study at hand and thus its guiding research questions. The third section describes the methodology
used to explore the research questions and presents the companies used as case studies. In Section 4
the results are presented. In Section 5 key research findings are discussed by outlining ten propositions.
Finally, this paper ends with conclusions that include both academic as well as managerial implications.
2. Literature Review
2.1. Management of Social Sustainability in Apparel Supply Chains
As outlined in the introduction, the latest literature reviews reveal that the social dimension of the
TBL still lag behind environmental considerations [22]. Nevertheless, recent review papers on social
supply chain management [19,26–28] can be viewed as substantial starting points to trigger socially
related research, offering theoretical and conceptual frameworks that point at specific research gaps.
Köksal et al. [26] reviewed papers that specifically dealt with the textile/apparel industry and
offered a beneficial conceptual framework to understand related drivers, enablers, and barriers for the
implementation of social risk management practices in textile/apparel supply chains. While social
risk management practices include collaboration and assessment (see also [58]), and reporting on the
activities of a focal company, they also help to mitigate external risks and stakeholder pressures
such as negative press in the media and improve social performance in the supply chain [26].
Yawar & Seuring [27] classify responsible supply chain actions with three underlying strategies:
communication, compliance, and supplier development. By considering all three actors of SSCM, their
findings clearly emphasize the importance of a company’s internal orientation towards sustainability
(both, focal company, or supplier) and hence its implementation of social risk management practices.
Moreover, it has been underlined that cooperation and long-term relationships between focal companies
and suppliers is key in the implementation of social responsibility [26]. Yawar & Seuring [27] further
affirm that the successful management of social issues in supply chains demands trust and commitment,
which require collaboration and supplier development strategies to ensure social improvements in
supply chains. Huq et al. [49] use different terminology and declare that monitoring, collaboration
and innovation are the necessary social management capabilities of a company. Zorzini et al. [28] use
the literature on socially responsible sourcing to suggest that it is necessary to classify areas of interest
such as strategy, organizational culture, risk management, transparency, and how they impact upon
performance. Among other findings, the importance of transparency has been emphasized and research
gaps in all five areas are provided. For instance, the implementation process still remains insufficiently
investigated and in terms of transparency one should consider incorporating western-based codes and
certifications into developing country supply chains [28]. Huq et al. [49] observe that future research
directions should concentrate on countries such as Vietnam and that there is a need for an inductive
theory in this specific field [49]. In sum, socially oriented literature reviews highlight the significance of
considering the supplier perspective in future research, especially in developing countries [19,26–28].
2.1.1. Social Sustainability Issues in the Apparel Industry
Mainly based on the International Labor Organization (ILO) and United Nations organizations, Yawar
& Seuring [27] summarized the social issues that usually appear in supply chains. These include labor
conditions, child labor, human rights, health and safety, minority development, disabled/marginalized
people inclusion, and gender. While these social issues provide general conclusions, the apparel
industry faces major challenges specifically concerning labor conditions which include low wages,
overtime work and the formation of unions, but also child labor and health and safety due to its buyerSustainability 2018, 10, 1039 4 of 35
driven characteristics [26,29,34,37,41,42,59–61]. In fact, the buying practices of apparel retailers are
one of the major contributors to the forlorn situations in apparel factories and the contradiction
is clear. The demand for shorter lead times, higher quality products, and cost pressures cause
social problems, however, apparel retailers still insist on compliance with standards or codes that
cannot be managed by factory managers [29]. This paradox leads to negative socially responsible
outcomes [29,38]. Baskaran et al. [34] identified child labor and long working hours as primary
violations by investigating 63 textile and clothing suppliers located in India. Yu [37] shows how
a well-known footwear retailer constantly seeks low prices, and this applies huge pressure on their
suppliers as it is impossible to achieve a competitive advantage to ensure orders and simultaneously
maintain compliance with acceptable working conditions [31,37,62]. Oelze [62] further observes
that the intrinsic motivation of textile suppliers to be sustainability oriented is often missing but
also mentions that governmental regulations, lack of knowledge, and competitive pressures are
hindering factors [62]. In this regard Huq et al. [38] report how the buyers’ behavior leads to
negative outcomes, forcing suppliers in Bangladesh to engage with mock compliance to cover
overtime work. Further, Locke et al. [63] compared two Mexican garment suppliers to Nike and
found how a distrustful, arms-length relationship merely based on compliance with less frequent and
more formal communication between the retailer and the supplier resulted in the payment of low
wages and overtime work at the factory [41]. Anner [59] coded the audit reports of the Fair Labor
Association (FLA) between 2002 and 2009 and found evidence that, in Vietnam, health and safety, wage
and overtime work were primarily detected during audits [59]. Moreover, Baskaran et al. [64] reported
that suppliers in India were facing issues with overtime work due to unpredictable orders from
the retailers. Stigzelius & Mark Herbert [65] support this finding with their discussion that apparel
retailers put higher pressure on suppliers to offer lower prices and reduced lead times [5,10,33] in
order to conform to the frequently changing fashion market [65]. In their paper they note that apparel
buyers are not willing to pay more for the products, even if a supplier is compliant with the Social
Accountability International Standard (SA8000), which increase accreditation costs for the supplier
and result in further expense [65]. Jiang et al. [31] concludes that the textile and apparel industry is
buyer-driven and leads to cannibalistic competition among suppliers in China. From the suppliers
view, another fact is that corruption, especially in developing countries, is evident [31]. Suppliers can
circumvent penalties with briberies paid to government labor agents [38]. During interviews with
garment supplier workers in Vietnam, one worker stated that they are taught what to say to auditors.
Hoang and Jones [61] summarize that workers support their companies by cheating the auditors, and
this is a result of the pressure that buyers place on the suppliers and the threat of order cancellation.
Very striking are the reports of academics who observe that the socially responsible practices proposed
by western retailers are merely launched for instrumental reasons [26,37,38]. Media also stresses this
fact, as even the Ethical Trading Initiative (ETI) was recently negatively spotlighted [43].
2.1.2. Social Management Strategies
As a consequence, apparel retailers conduct social management strategies [27], social risk
management practices [26], or build up their social management capabilities [49] in order to respond
to and mitigate external risks. As different researchers use different terms in SSCM literature, this can
lead to confusion, however, one needs to note that these abovementioned three terms comprise similar
underlying actions to ensure social responsibility [26].
In response to the possible social issues emerging in apparel supply chains, focal companies
(apparel retailers) typically launch compliance strategies, which include codes of conduct and
standards, auditing and monitoring [13,27,29,38,41,42,61,66]. These regulations ultimately cover
social and environmental standards throughout the supply chain and are considered as mandatory for
suppliers to commit to and gain orders from retailers [67]. With regards to social issues in the apparel
industry, Huq et al. [38] identified employee wages and benefits, child and forced labor, workplace
harassment, and working hours and conditions as key aspects of codes of conduct [38]. AlthoughSustainability 2018, 10, 1039 5 of 35
codes of conduct gained much criticism, especially to be instrumentally used [29,38,42,61,63,68], they
still remain the most commonly used practice by apparel retailers [27,29,69]. Nevertheless, from the
apparel retailers point of view, it becomes increasingly difficult to monitor, hold control, and implement
codes of conduct in all factories, including further tiers such as subcontractors, within the entirety of
their supply chain [57,61,68]. As the buyer-driven characteristics in the apparel supply chain increase,
codes of conduct will be inefficient and force suppliers to non-compliance [26,29]. Once apparel
retailers engage in codes and standards, it subsequently results in the assessment of the suppliers’
social performance based on the apparel retailers’ codes of conduct or other standards developed
through multi-stakeholder initiatives (MSIs), which play a significant role in the apparel industry and
are employed by apparel retailers to increase their credibility and legitimacy [12,13,26,27,65,70–72], and
also to reach the reputational protection summarized in [59]. Mostly, such multi-stakeholder initiatives
usually establish their own codes based on ILO standards and have their own monitoring systems,
which are generally conducted by external organizations regarded as third party monitors/auditors,
in addition to the first- and second party monitors/auditors [58]. In this regard, O’Rourke [71]
specifically evaluated the leading multi-stakeholder initiatives in the apparel industry such as the
Worldwide Responsible Accredited Production (WRAP), Social Accountability International (SAI here
referred to as SA8000), Ethical Trading Initiative (ETI), Fair Wear Foundation (FWF), and Worker Rights
Consortium (WRC), and their respective codes. Overall, positive evidence of the implementation of
SA8000 can be found in the papers of Ciliberti et al. [70,73], who propose that, besides improving
the social circumstances in a factory, the initiatives also reduce information asymmetries between
supply chain partners and hence decreases overall coordination costs [70,73]. Moreover, Stigzelius
and Mark-Herbert [65] discuss how the SA8000 results in benefits to factories as they will enhance
the corporate image and decrease labor turnover. What results is confidence, competitiveness, and
differentiation with the aim to gain orders from retailers with an ethical awareness profile. However,
obstacles to the adoption of SA8000 become evident as there is a lack of support from retailers, especially
in sharing in the costs of auditing and certification [65]. Using evidence from the clothing industry
in Bangladesh, Huq et al. [49] provide a framework for audit and compliance capabilities. First,
they differ between supplier-arranged audits (suppliers who employ standards and the respective
codes from MSIs, such as SA8000, WRAP or the Business Social Compliance Initiative (BSCI)) to
subsequently become certified by third-party auditors and buyer-directed audits, who base their audits
on the clothing retailers’ codes of conduct and then either are assessed again by third-party auditors
or the clothing retailers’ internal auditors (second party audit [58]). Each stream has led to different
results in supplier compliance. The buyer-directed approach with internal auditors leads to positive
outcomes at the supplier level, such as training and education for workers, and substantive dialogue
between clothing retailers and suppliers that result in improved supplier compliance. The third-party
auditing, which can be a part of buyer-directed audits or supplier-arranged audits, has been described
as merely being symbolic and generally end up in mock compliance [49]. However, this seems
contradictory to the abovementioned findings of Ciliberti et al. [70,73]. In sum, monitoring and
auditing are performance measurement strategies that check for conformity with required codes and
standards as required by the retailers [27,58].
Finally, compliance strategies are not merely operationalized but also documented, reported
and communicated [26,27]. Yawar and Seuring [27] propose communication strategies as another
substantial socially responsible supply chain action. These include activities such as corporate
reporting, also termed sustainability reporting or corporate responsibility documents and labelling [27].
Typically, research on reporting and labelling sustainability in the apparel industry is dedicated
to a focal company’s CSR operations to disclose and inform external stakeholders. Hence, it is
intended to mitigate risks by enabling transparency, accountability and credibility, but also to
educate customers and increase awareness [13,26,66–68,74–77]. Nevertheless, studies that deal
with the evaluation of apparel companies’ reports are helpful to learn about the internal use of
reports [13,78]. This is more suitable to the aim of the paper at hand, as the researchers investigateSustainability 2018, 10, 1039 6 of 35
the relationship between an apparel sourcing intermediary and its supplier base, deviating full focus
on public disclosure to external stakeholders such as end-consumers, media, or non-governmental
organizations. Therefore, the communication strategy suggested by Yawar and Seuring [27], is adapted
for the purpose of the study at hand and extended with other researchers’ ideas. According to
Turker and Altuntas [78], the communication between buyers and suppliers is an essential key in
building the trustful, long-term relationships mentioned earlier. Based on a content analysis of
a well-known fast-fashion company’s reports, they summarize communication methods and highlight
their importance in SSCM, but also note that cross-cultural perspectives need to be considered by firms
when communicated to suppliers [78]. This view is also supported by Zorzini et al. [28], who state that
transparency (to stakeholders) is ensured through reporting, codes of conduct and ethical standards
(MSI accreditation), and they underline the need to incorporate cross cultural views. In fact, although
finding evidence from other sectors, Busse et al. [79] note that spatial distance, linguistic distance, and
cultural distance all significantly affect communication efforts between actors and hence affect supplier
development for sustainability. Similarly, but noteworthy in this regard, Awayshe and Klassen [57]
investigated the organizational, cultural and geographical distance of socially responsible practices.
It turns out that the distance problematic especially affects communication efforts, such as the
documentation of social audits and compliance. For example, a study by Ciliberti et al. [73] on SA8000
reveals that buyers need to rely on local institutions, such as NGOs, to be additionally safeguarded,
especially when western based codes are required but may be hindered by geographic and cultural
distance. In other words, as distance is increased, supply chain actors need to make sure that western
based codes are comprehensive in their meaning and application [73]. Further, Mamic [13] reports that
codes of conduct are a substantial part of supplier development whereby corrective action plans (CAP)
play a central role. Once any audit has been conducted, for example in achieving MSI accreditation
by a third party auditor [72], a remediation system (CAP) is developed if violations according to the
required standard have been detected [13]. In this regard, Milne et al. [72] depict the process of how
an apparel retailer addressed the obligations for accreditation by the FLA in its supply chain [72].
Ciliberti et al. [80] outline the accreditation for SA8000, based on five apparel companies as case
studies [72,80]. Ciliberti et al. [80] further reveal that companies face huge barriers with the integration
of CSR in developing countries, especially due to the communication gaps and lack of information
that derive from cultural and linguistic distance. Lastly, the lack of knowledge regarding sustainability
issues in the buyer–supplier relationship has been found to be a hindering factor for collaboration
efforts between the two actors [62].
In this context, Yawar and Seuring [27] point to the significance of collaborative and long-term
partnerships between the actors of a supply chain, because this ultimately leads to an enhanced adoption
of socially responsible actions and supports the implementation of codes and standards throughout
the apparel supply chain [14,27,36,41,61,62,81]. Accordingly, such collaborative relationships or
interchangeably used long-term relationships can be established through direct and indirect supplier
development strategies [27,82]. Based on the explanation given by Huq et al. [49] collaboration
“. . . involves skills, processes and practices that improve a firm’s coordination with its suppliers,
consumers and other stakeholders to jointly improve social outcomes”. While direct supplier
development strategies like training and education initiated by the buyer will support suppliers
in handling social issues [38], financial and technical investments at the supplier level will enhance their
capabilities in managing social issues. On the other hand, indirect supplier development strategies, such
as supplier evaluation and informal auditing, initiated by the buyer will have encouraging effects on the
supplier to facilitate social sustainability [27]. In fact, providing training has been found to be effective;
Ansett [67] shows how an apparel company was able to improve wages in its supply chain and provide
benefits for factory managers and workers [67]. Based on a survey, Sancha et al. [82] found a positive
relationship between supplier development practices and the supplier’s social performance, for example
in human rights and child labor employment at the supplier level [82]. Perry and Towers [14] underline
the importance of long-term partnerships between buyers and suppliers, accompanied by trust andSustainability 2018, 10, 1039 7 of 35
commitment in order to cut costs [27] and improve CSR performance. They mention how suppliers
who collaborate with buyers can reduce uncertainty and lead times, which consequently positively
affects suppliers in coping with orders and to conform with social sustainability requirements [14].
Carter and Jennings [83] discuss how trust in the buyer–supplier relationship triggers the willingness
of buyers to provide help and support to suppliers and jointly solve problems once they emerge [83].
Based on the investigation of a well-known apparel retailer, Locke et al. [41] picture that frequent
visits and open communication between a buyer and its supplier brings trust and a greater working
relationship between the actors. In that regard Locke et al. [36] show that a commitment-oriented
approach between buyers and suppliers is complementary to the traditional compliance-oriented
approach, which enhances labor conditions in the supply chain. Drivers for embracing commitment
relationships are mutual benefits, such as learning, capacity building, positive incentives, and respect.
The underlying approach to a commitment-oriented strategy is to uncover, analyze, and correct root
causes for non-compliance. They further emphasize related mechanisms, such as joint problem solving,
information sharing, trust and reciprocity, and characterize the dynamics of mentoring and coaching [36].
Finally Grimm [58] outlines 14 critical success factors for the implementation of sustainability standards
among suppliers and sub-suppliers (subcontractors). Among others, trust between focal firms, suppliers
and sub-suppliers is a striking factor for establishing strategic supply chain partnerships, but also
geographical and cultural distance are mentioned as important. Further Grimm et al. [84] stresses that
code and standards implementation are hindered due to a lack of transparency and missing contracts
with suppliers and sub-suppliers and their unwillingness to commit and be involved with one another.
They suggest that focal firms should be engaged with direct supplier involvement, which in turn
increases trust and maintains an awareness of sustainable responsibility [58,84].
In sum, it seems that there is a sequential process in developing collaborative relationships, thus
companies should first engage with supplier development strategies where trust and commitment are
obviously critical antecedents [27,83]. It is important to note that each social management strategy is
not exclusive and thus not necessarily independent from each other. Ultimately, the strategies support
the implementation and assessment of codes and standards to ensure social responsibility across the
supply chain [27].
While the perspectives described above do not explicitly integrate sourcing intermediaries,
conclusions, especially for the apparel industry, fall too short, therefore calling for a more detailed
study on apparel sourcing intermediaries to investigate how the adoption and implementation of
social management strategies in the supply chain [19] may change or be facilitated, which leads to the
following two research questions:
• RQ1: Why are Vietnamese apparel suppliers (sourcing intermediaries and factories) tackling
social issues?
• RQ2: How are Vietnamese apparel suppliers (sourcing intermediaries and factories) tackling
social issues?
The next section explains how the underlying theory of social sustainability supply chain
management can be linked to the role of the apparel sourcing intermediary by specifying the current
gap and justifying the third research question of the study.
2.2. Linking Sourcing Intermediaries in Apparel Supply Chains to Social Sustainability
As learned earlier in this paper, apparel retailers shifted production to international low-cost
suppliers and this increases complexity in the management and control of the supply chain [1,15,52].
The primary motives to engage in global supply chains is cost reduction and speed [1,15], but further
significant drivers can be found in the paper of Jia et al. [7], such as access to scarce raw materials.
Logically, it is not surprising that the outsourcing strategies of apparel retailers result in a complex
and intertwined supply chain. In this regard, Perry and Towers [14] critically point at the exchange of
information and the importance of the relationship between all actors within the complex and extendedSustainability 2018, 10, 1039 8 of 35
nature of the apparel supply chain [14]. Consequently, besides direct sourcing structures where apparel
retailers directly deal with factories, apparel retailers can set up a mediated sourcing structure i.e., where
a third party intermediary is in between and consolidates the demand of one or more apparel retailers
and sources the garments for each of them from its supplier base [51]. In other words, apparel retailers
set up different methods in the form of strategic global management departments or subsidiaries in
foreign countries, which act as international purchasing offices (IPOs) [7,85,86] or employ third party
(external) sourcing intermediaries such as full service providers and agents [1,6,15,33,51,52,55] who will
support focal companies with the management of globally dispersed suppliers to overcome common
barriers and find opportunities in their global purchasing strategy. Interestingly, not many papers can
be found investigating the role of intermediaries in the apparel industry [1,6,15,33,87] and it is very
striking that research still shows a lack in dealing with the role of apparel intermediaries in terms of the
management of a sustainable supply chain.
Basically, sourcing intermediaries can manage sourcing, supplier quality control, shipping
management and distribution tasks for apparel retailers [3,15]. Interchangeably as defined by Jia et al. [88]
an intermediary ISO (international sourcing office) may include the use of a third party trading company
by a focal company. In their case study, they focus on IPOs, defined as an intra-organizational unit
(a part of the buying company), differentiate five types of IPOs and highlight their integration to a focal
company based on their roles and activities. The role theory in their study comprise the following routine
roles of IPOs: gatekeeper, negotiator, coordinator, supplier’s advocate, supplier developer, cultural
broker, internal advisor, and other supports. Further, they made distinctions based on the strategic roles
carried out by the five types of IPOs: supply policy maker, network structuring agent/network orchestra,
innovator, and knowledge broker. Finally, they propose that more research is needed, especially at
the intermediary ISO stage [86,88]. Although their conclusions are with reference to other industries
rather than the apparel sector and focus on IPOs, they are highly supportive in understanding why focal
companies hire intermediaries in their supply chains.
Another detailed picture about the key responsibilities and interplay with the focus on apparel
supply chain actors, i.e., of retailers, sourcing intermediaries and factories, is provided in the study of
Neu et al. [33]. In general, apparel retailers seek out intermediaries to find advantages in managing the
rising complexity of their supply chains, especially in collaboration and communication concerns [1].
The high volatility of the respective apparel sourcing countries and their communications turn out
to be a major problem when dealing directly with manufacturers located in foreign countries. This
primarily evolves due to cultural, linguistic, and industry structure reasons [87]. Despite geographical
and cultural distances between retailers and their overseas suppliers, Popp [87] illustrates how the use
of intermediaries improves supply chain performance by lowering information costs, economies of
scale and scope, and creating a value adding effect [87]. These value adding effects can be described
as orchestrating and coordinating networks by managing the capabilities of the information and
material flows of the sourcing intermediary [1]. Based on a case-study with two UK fashion retailers,
Purvis et al. [15] further confirms that, especially for mid- and high-fashion items that are produced
globally, the use of intermediaries is highly beneficial. Major reasons include high flexibility (see
also [6]) and independent global sourcing in an increasingly complex global supply chain, which is
reflected by financial, managerial and technical knowledge of intermediaries in the local environment
of the suppliers’ countries. This expertise helps to organize a dispersed production structure and
enhances lead times, enables lower costs for supplier search, as well as negotiation with suppliers,
and monitoring costs [6,15]. Indeed, Cook and Kozar [6] discuss the competitive advantages of
employing sourcing intermediaries who effectively manage cost and pricing strategies in order to
save money for apparel retailers. In their study, they reveal that sourcing intermediaries enable cost
reductions by finding the factory with the lowest price, which leads to a highly competitive situation
between factories but consequently supports a race to the bottom. One common way conducted by
the intermediary is the organization of competitive auctions [1,33]. As a result, from the retailer’s
perspective, the use of intermediaries will also decrease fixed costs in the development of an apparelSustainability 2018, 10, 1039 9 of 35
supply chain and increase flexibility [6]. According to Masson et al. [1] they act as network coordinators,
manage information and material flows and network orchestrators or coordinators [1]. In other words,
intermediaries act as hubs who bring all actors in the supply chain together to manage effectively
their linkage and expertise. Noteworthy are the findings from Zhang et al. [89], who use the term
boundary-spanners and show how agents within the food and automotive industry generate trust
between the actors through an agent’s strategic communication and professional knowledge. Moreover,
as Purvis et al. [15] affirm, intermediaries enhance visibility to retailers further up the supply chain and
also provide opportunities to local suppliers who engage new markets. On the contrary, slow-fashion
items (basics such as white t-shirts) with high volumes are sourced globally in low cost countries,
but without intermediaries, as apparel retailers prefer to source directly by building up-close and
stable relationships [15]. Conflicting with the findings of Zhang et al. [89], this would lead to the
conclusion that the use of intermediaries will be a hindering factor in establishing collaborative and
trustful relationships between retailers and factories. Indeed, as learned earlier in this paper, close
relationships and collaboration efforts act as major contributors to improving social responsibility, yet
the sourcing intermediary seems to be an obstacle [1]. In the paper by Masson et al. [1], the analyzed
retailers showed little to no evidence of a relationship to the garment manufacturers. They point at
the significantly high dependency of western retailers on intermediaries who are located in low-cost
countries. This causes high risk, as many of the retailers in their study are not even aware of which
suppliers manufactured their products, which leads to a lack of control and transparency, thus leaving
them vulnerable to child labor scandals [1]. Furthermore, Neu et al. [33] discuss how risks based on
the buyer-driven requirements provided to the intermediaries are passed along via written contracts.
In case of failing, (on time delivery) high financial penalties can be alleged by the retailers [33]. This
pressure of course will then be put onto the suppliers to manufacture the goods on time, which
inevitably leads to social issues such as overtime work. In this regard, Köksal et al. [26] clearly
point at the barriers in the implementation of social sustainability in apparel supply chains. For
instance, to conform with the buyer requirements, multilevel contracts with various vendors and
subcontractors are signed, which raises the complexity and in fact this is not a seldom case, especially
in the apparel industry [26,67,87]. Interestingly, Awaysheh and Klassen [57] discuss that trust and
communication between buyers and suppliers will suffer the longer a supply chain becomes, results
that are counterproductive to communication, supplier development, and compliance strategies.
Finally, they suggest that future studies should elaborate on collaboration and supply chain length to
better understand each factor [57].
As a consequence, with the aim to circumvent uncertainty by the length of a supply chain, apparel
retailers should consider socially responsible practices (compliance strategies), such as the use of
third party audits that will certify factories based on MSI standards, which is a common way to gain
legitimacy, safety, and mitigate stakeholder pressure [13,26,71]. Still, these standards turn out to be
problematic, as evidence from Vietnamese managers shows that sourcing intermediaries prepare
their subcontractors for upcoming audits in order to ensure that the focal companies do not stop
buying the vendor’s products [61]. This of course is attributable to the likelihood of corruption and
mock compliance in a developing country’s factories as the researchers reveal in apparel supply chain
studies [36,38,61,80].
Briefly, despite all the above mentioned possible operational shifts from retailers to the
intermediaries the paradox is at hand: researchers primarily found that price and lead times are
the most critical factors for hiring sourcing intermediaries. This again is counteractive to the
implementation of social sustainability and due to the nature of lengthening the supply chain one can
assume that intermediaries act as hindering factors in implementing socially responsible strategies.
Generally, the suggested theory on social management strategies requires direct relationships between
a focal company and its suppliers. This is particularly interesting, because as learned earlier,
the relationship between the retailer and the factory will be significantly interrupted by hiring
intermediaries. On the other hand, previous research has clearly shown how intermediaries canSustainability 2018, 10, 1039 10 of 35
facilitate huge advantages to focal companies due to their expertise and the specific roles they carry out.
Logically the question arises, how the suggested social management strategies can be implemented
when focal companies use intermediaries to supply their products from foreign countries. More
specifically, it will be interesting to investigate whether and how the apparel intermediary’s capabilities
and skills can be helpful and applicable in implementing social sustainability in apparel supply chains.
This leads to the third research question of the study:
• RQ3: How do apparel supply chain actors perceive the role of the apparel sourcing intermediary
for the implementation of social management strategies?
Based on the current call for more evidence from developing countries, the suppliers’ perspectives
and social sustainability [26,28,38], this study will show why and how sourcing intermediaries can
act as enablers for the implementation of socially responsible strategies, and thus highly contribute to
the existing theory that widely neglected the role of apparel sourcing intermediaries in terms of social
sustainability. Moreover, this study follows suggestions of the Yawar and Seuring [27], who encourage
academics to find empirical evidence in supplier development strategies across supply chains.
Given the collected information on social sustainable supply chain management and the
exploratory nature of the paper at hand, it is beneficial to develop a model that will support the
analysis and organize the findings. More specifically, in order to explore the theory-driven research
questions (RQ1, RQ2, RQ3) [90], the outlined theoretical framework in Figure 1 supports the empirical
research and helps to organize and manage findings and their analysis. The theoretical framework
mainly draws on the social SSCM contributions of Yawar & Seuring [27] and applies, in addition,
the ideas of Köksal et al. [26] in order to enrich their proposed framework with the study at hand.
While the existing dominant conceptual frameworks detect three important actors in SSCM, it is vital,
especially for the apparel industry, to extend the perspective with another significant actor: the sourcing
intermediary. Accordingly, the findings of the paper at hand should help to extend and refine the
existing knowledge and frameworks on social SSCM theory with novel contributions by integrating the
role of the sourcing intermediary in apparel supply chains.
Figure 1. Theoretical framework of the study mainly based on Yawar & Seuring (2015).
3. Research Methodology
3.1. Method
As the field of apparel sourcing intermediaries and social sustainability is still in its very
early stages, especially for the role played by apparel sourcing intermediaries in managing and
implementing social sustainability within a supplier base, this study conducts a multiple case study
method that is exploratory in nature [90–92]. So far case study research has been used by researchersSustainability 2018, 10, 1039 11 of 35
to examine supply chain management topics and the research follows such leading academics as
Eisenhardt [91] and Yin [93], in addition to examples of existing exploratory cases [1,49,73,94–97] and
suggests step-by-step guidelines for conducting new case studies [96–102]. As highlighted by scholars,
a multiple case study design has its strengths in finding more convincing and robust evidence, which
will increase generalizability and allow for a deeper exploration of the outlined research questions
when compared to a single case-study [90,92,93,103]. Furthermore, the chosen research design is
justified by the form of this study’s research questions “why” and “how”, with the aim to investigate
a contemporary phenomenon in a real-life situation accompanied by the fact that the researcher has no
control over behavioral events [91,93]. Additionally, case study research is an appropriate approach
to build on and extend but also to develop theory in response [90,92,93,99,100,104]. To enhance
the research quality and ensure rigor during the research process, the researchers conducted the
five-stage research process described in the following paragraphs (i.e., research question, instrument
development, data gathering, data analysis, and dissemination), proposed by Stuart et al. [102].
First, the researchers examined the relevant literature and linked apparel sourcing intermediaries
to social sustainability in supply chains where contradictions and research gaps were highlighted.
Specifically, the apparel industry is often confronted with social issues as emphasized earlier in
Sections 2.1 and 2.2, thus it serves as a proper field of application. Based on this, research questions
(RQ 1–3) have been formulated. Ultimately, as this study is exploratory in nature, inductive findings
are of special interest during analysis [105–107], thereby aiding the development of novel propositions
or inductive theory [90,106].
When building theory from case studies, case selection using replication logic is suggested [100] and
the case companies were selected so that each predicted similar results (literal replication) [92,93]. Thus,
a smaller number of cases is acceptable and multiple case studies with four to ten cases are sufficient
to find evidence [91]. Further, the cases ideally should meet the following criteria: all suppliers are
physically located in a developing country and active in the apparel industry; all apparel factories
process orders from sourcing intermediaries as their customers; and all suppliers supply international
apparel retailers. It is also required that the case apparel factories are diverse in their size, order
quantities and their year of establishment [100]. Purposely, the researchers sought out apparel
intermediaries and found one apparel sourcing intermediary based in Vietnam and who was contacted,
visited and interviewed as a part of the supplier base. Moreover, the researchers contacted one of the
intermediary’s customers, a western apparel retailer, which resulted in six appropriate cases. Hence,
all of the criteria for appropriate cases have been met and the declared unit of analysis is the apparel
sourcing intermediary.
Due to the exploratory nature of this study a total of eight face-to-face semi-structured interviews
lasting 60–90 min each were conducted on three stages in the supply chain: the apparel sourcing
intermediary and four of its related Tier 1 factories, and a well-known apparel retailer who sources
via the mentioned intermediary from Vietnam. Although not all sustainable supply chain actors
are involved (supply chain stakeholders), the three stages mentioned above allow us to examine
a companies’ actions and their interaction, which is of special interest in this study [99]. Interviews
have been declared as one of the most important sources in a case study [93], which according to
Saunders [107] provides the opportunity to open a discussion, collect contextual and background
material, and to understand relationships. Hence, the researchers prepared an interview guideline
based on the theoretical background of this study (see Appendix B), which ultimately should provide
deep insight into why and how the cases adopt social management strategies (communication-,
compliance-, and supplier development strategies) and what role the sourcing intermediary plays in
the implementation process.
To answer the research questions of this study, the authors followed qualitative content analysis,
which is an appropriate tool to assess the interview material and analyze its verbal and formal
content [105]. The semi-structured interviews, as well as all additional secondary data and follow up
E-mails of the six cases were analyzed separately by evaluating text passages and coding themSustainability 2018, 10, 1039 12 of 35
in compliance with the suggested categories of the outlined theoretical framework in Figure 1.
In that regard the professional QDA-Software (Qualitative Data Analysis—Software) MAXQDA
(www.maxqda.com) has been employed for qualitative data analysis. As the a priori categories and
dimensions are theory-based and have been clearly defined, the transparency and objectivity of the
research process is given and increases the coding reliability. As suggested by Eisenhardt [91] and
Voss et al. [100], within-case and cross-case analysis were conducted to investigate the cases [91,100,108].
First, within-case analysis was performed as the interviews were each individually analyzed case
by case. This allows the researchers to become familiar with each case company independently and
may evolve unique patterns before generalizing across the cases [91,100]. The subsequent cross-case
analysis will then help to find categories, themes or typologies for the conceptualization or supports in
building considerable theory, which is likely to offer an integrated framework covering all the cases of
the study [96,106].
Therefore, one tactical approach is to select categories or dimensions that derive from the existing
literature to examine patterns across the cases [91,108]. Yin [93] further observes that a good case
study will benefit from the development of a priori theory, which will be helpful in defining the
right research design and the data to be collected [93], regardless of how inductive the approach
will be for theory building [100]. In fact, by following replication logic [92] in multiple case studies
the development of a rich theoretical framework is crucial to analyze the data, which aims to find
similarities across the cases and thus strongly support triangulation, adding to generalizability and
validity of the findings [91–93,100,107]. The theory on social SSCM deriving from the literature review
serves as the theoretical framework [106] (Figure 1), which helps to organize, manage, and comprehend
the material collected and explore the research problem outlined in this study. Additionally, in terms
of validity and reliability, the content analysis research can be enhanced with the involvement of one
more researcher during the data search and analysis. Therefore, inter-coder reliability was ensured
as the cases have been analyzed and coded by the contributing researchers separately [109]. Lastly,
the results have been discussed with the involved researchers to find an agreement with the most
prominent and striking codes in order to finalize the results. To further ensure the quality of the results,
the researchers addressed the validity and reliability by performing the dedicated tests proposed by
Yin [93]. Finally, by using the pattern-matching technique [92,93,104] the semi-structured interviews
were examined in order to find evidence from the results that may match or not match the researchers’
literature review.
3.2. Case Description
Table A1 provides relevant data about the six case companies, whose identities are protected in
by code names: RetA, IntA and FactA-D. IntA, a subsidiary company, belongs to a global apparel
company headquartered in Hong Kong, which has its expertise in apparel and accessories sourcing
and is a supply chain partner to well-known leading apparel brands. More specifically, the global
apparel company is a full-service provider, globally active in more than ten countries, including offices
in China, Sri Lanka, Indonesia, Bangladesh, Turkey, Spain, and New York, who employs around
approximately 1500 workers worldwide. Each sourcing office is independent and free in its decision
taking. IntA, as one of its global offices is located in Vietnam, employs approximately 150 workers.
They offer expertise and services, especially in research and development, logistics, market intelligence,
merchandising and outsourcing, quality assurance, -control, -engineering, -monitoring, and -auditing,
shipping, social and chemical compliance, and sourcing. IntA’s major customers include well-known
apparel retailers mainly located in the USA and Europe and provide both men’s and women’s
contemporary wear, casual wear, and active wear. Their product expertise lies in circular knits (t-shirts,
polo shirts, sweatshirts), coordinates, denim, dresses, flat weave bottoms (chinos, cargo pants, 5-pocket
pants, and skirts), indoor jackets, men’s shirts, and outdoor jackets. Their supplier base comprises 35
apparel factories all located in Vietnam. The researcher found access to four apparel factories (FactA–D)
which include factories of IntA’s supplier base with very high and low quantities manufactured forSustainability 2018, 10, 1039 13 of 35
IntA, and thus this enhances representativeness for the whole supplier base. In 2016, the quantities
manufactured by Fact A ranged about 120.000 units, Fact B 350.000 units, Fact C 710.000 units, and
Fact D 160.000 units, all for IntA. IntA promises lead times between 75–90 days to its customers.
Finally, as one of IntA’s customers, RetA is a global apparel company located in Europe. The company
includes different brands which are active in various segments and offer various product categories
globally. The company’s annual turnover in 2016 was over five billion Dollars and it employs around
15,000 workers around the world. Moreover, RetA sources from more than 38 countries, including
a network of over 1200 factories, sourcing directly from factories or via intermediaries. Furthermore,
its own Code of Conduct and standards are assessed in each factory they are sourcing from and RetA
is committed to the FLA and Better Work program in some of its sourcing countries (Vietnam).
Although the researcher had the possibility to meet more than one expert within a company
(IntA, FactB, and FactD), the interviews with case FactB and FactD are summarized as one interview
each. The interview with these experts took place at the same time and sometimes they merely had
a confirmatory effect, while just one expert was actively discussing with the researcher. At FactB,
the major interview partner was the Head of R&D and was accompanied by the Compliance Manager
of the company. The primary interview partner at FactD was the Compliance Manager, while the Vice
Director as well as the Merchandise Manager were only confirmatory and complementary. Luckily,
in every case key informants on the topic (Compliance Managers or the Corporate Responsibility
Coordinator for RetA) took part. It is noteworthy that the interviews with IntA’s managers (Country
Manager (CM), Compliance Manager (CompM), and Head of Quality Assurance/Quality Control
& Technical (QC/QA)) were conducted independent from each other, thus they were evaluated and
analyzed exclusively. Depending on the interviewee’s preference, the interviews were carried out
in English or Vietnamese and translated when necessary. All interviews were audio recorded and
transcribed. Further, the researchers had multiple chances to discuss findings with the sourcing
intermediary but also to contact the experts via follow-up mails to validate the results. The fact that
all the apparel factories are part of the sourcing intermediary’s supplier base and RetA is a customer
of IntA supports our triangulation. In addition, visits to all of the case companies’ offices and
related factories allowed us to take pictures and notes on the spot. This collection was further
supplemented with multiple sources of secondary data in the form of sensitive company documents,
such as detailed company profiles, current social compliance status, historical, actual and upcoming
audit documents and reports, corrective action plans, companies’ own social compliance checklists,
historical sustainability documentations, social compliance presentations for trainings and education,
and websites, all of which sufficiently enabled triangulation [93].
The results are presented and discussed in the following section by taking note of other researchers
recommendations on how to report theory-building case studies in a clear and comprehensive
way [90,96,110], with the goal to explore the research questions and thereby enlighten the role of
the apparel sourcing intermediary for the implementation of social sustainability. Readers of the paper
at hand should note that the researchers only present findings from the cross-case analysis.
4. Results
Recall the outlined research questions of this study:
• RQ1: Why are Vietnamese apparel suppliers (sourcing intermediaries and factories) tackling
social issues?
• RQ2: How are Vietnamese apparel suppliers (sourcing intermediaries and factories) tackling
social issues?
• RQ3: How do apparel supply chain actors perceive the role of the apparel sourcing intermediary
for the implementation of social management strategies?
In order to answer RQ1 and RQ2 the analysis is separated into two parts: first, the researchers
strive to understand the factories’ and sourcing intermediary’s motivation for social sustainability,You can also read
